The KLCI shot directly up from 1,660 and we think that the recent volume could not justify the current rise. Other factors such as an over expanded MACD which would normalize once the range of gains decline on day to day basis.
The market sees passive selling from foreign funds when the ringgit weakened against the USD breaching RM 4 to the dollar earlier last month.
As Ringgit stabilized the selling stopped and sees some buybacks changing hands to local funds. Problem is the amount of buying in terms of volume remain weak.
We suggest you take profit on shares at target KLCI of 1,758.
Previously bought shares nearing 1,660 on the index could be shifted back to cash for the time being. Our recommendation earlier CIMB already saw a 4.5% gain from our target buy of RM 5.50.
You can de-risk index related counters and buy them back when the market dips again.
In the mean time, the 100 point rise seems un-natural and likely would see a correction underway.